"This was the first time Bank Indonesia conducted an auction on foreign currency term deposit, with seven-day and 14-day terms. The auction has received a positive response from market players, as reflected in the over-subscription," the central bank`s director of public relations group, Difi A Johansyah, said here on Wednesday.
He stated the bidding reached US$1,615 billion, for the US$700 million worth of term deposits auctioned.
Difi said the target of US$700 million was reached with US$550 million for the seven-day term deposit (with an average weighted interest of 0.16709 percent) and US$150 million for the 15-day term deposit (with an average weighted rate of 0.18000 percent).
In the future, as per Bank Indonesia`s regulation, the auction of term deposits would be carried out every Wednesday, or the subsequent working day (which, again, will be determined by the central bank).
So, the term deposit could become an alternative outlet for banks to place their foreign currencies and reduce their dependency on outlets abroad, Difi noted.
He said Bank Indonesia would manage the foreign currencies received from the auction through various foreign exchange transactions in order to "deepen the domestic financial market" and use them as a monetary instrument.
With regard to the rupiah exchange rate, which dropped again on Wednesday to Rp9,455 against the US dollar despite the central bank`s auction of foreign currency term deposit, Difi said the results of the term deposit auction could not as yet be used to meet the domestic banks` need for foreign currencies through a swap.
"Later, after they are swapped, it is hoped the rupiah would stabilize. Moreover, the funds collected from the auction were big," he added.
Bank Indonesia conducted the foreign currency term deposit auction because the rupiah was continuing to depreciate over the past few months. This was due to a reduced supply of foreign currencies at home, while the demand for foreign currencies rose after the European crisis. (*)
Editor: Heru Purwanto
Copyright © ANTARA 2012
